Transaction Trends

A new study on small business lending in the United States reports that the nation’s largest fintech small business lending platforms funded nearly $10 billion in online loans to U.S. small businesses over a 36-month period and provided “substantial economic benefit” to local communities across the country.

Conducted by economic research firm NDP Analytics and sponsored in part by ETA, “The Economic Benefits of Online Lending to Small Businesses and the U.S. Economy” takes an in-depth look at the economic impact of online small business lending in the United States. Focusing on loans provided to 179,505 small business borrowers across the United States from 2015 to 2017 by five major online small business lenders, the study found that online lenders generated $37.7 billion in gross output during this period, creating 358,911 jobs and $12.6 billion in wages.

Nearly one-third of small business borrowers are located in lower-income communities, according to the study. About 24 percent of borrowers are micro-businesses with less than $100,000 in annual sales, and two-thirds have less than $500,000 in annual sales. The research showed that, on average, for every $1 lent to small businesses, small business borrowers’ sales increased by $2.31, generating $3.79 in gross output.

Small businesses, from local restaurants to small manufacturers, home builders, and doctors, rely heavily on access to capital, with nearly three-quarters of small business owners seeking small loans to start, operate, or expand their businesses.

“Online lending complements, rather than replaces, traditional funding sources,” said Jason Oxman, CEO of ETA. “Advanced technology enables online small business lenders to gather information and assess credit risks quickly to provide critical funding for small businesses. Online small business lenders provide key options and benefits to American small business owners in the highly competitive lending marketplace.”